London Stock Exchange Group (LSEG.L) reported mixed first-half results on Thursday, with investors looking beyond an 11.9% rise in total income to a 20% earnings per share drop and slowing subscriptions growth, sending its stock to a four-month low.
Total income reached 4.179 billion pounds ($5.31 billion), and LSEG said revenue growth for the year is expected to be near the top end of its 6-8% guidance range.
First-half growth in data and analytics was 7.6%, helping to reassure investors that a multi-year integration plan for data company Refinitiv is progressing without hitches after a bumpy start.
But growth in annual subscriptions value in data and analytics eased in the second quarter, which LSEG attributed to timing effects of differences between any cancellations and the start of contracted sales, which LSEG CFO Anna Manz told analysts has not affected business momentum.
LSEG bought Refinitiv for $27 billion in 2021 and data and analytics now makes up about 70% of its revenue.
“Stock has traded well year to date so mixed results not ideal for market reaction,” Barclays analysts said in a note.
LSEG’s shares were down 2.3%, having hit four-month lows, and were set for their largest one-day decline since May.
“Data & Analytics is growing faster than it has for many years, with the ongoing improvements to our offering and strengthened customer relationships increasingly reflected in financial performance,” Chief Executive David Schwimmer said.
Basic earnings per share fell 21.2% to 77.2 pence, hit by a higher effective tax rate. Profit before tax was down 17.6% at 662 million pounds, while dividends per share rose 12.6% to 35.7 pence, with an interim dividend up 12.6%.
The Eikon terminals LSEG inherited from Refinitiv to supply data and news to banks will have been replaced by the exchange’s new Workspace by early 2025, Schwimmer told reporters.
AI PLANS
LSEG said in December that Microsoft would buy a 4% stake worth $2 billion in the group, making its data and analytics available through Microsoft Teams for customers who want it.
“We are progressing well with the implementation phase of our transformational strategic partnership with Microsoft, with customers beginning to see the benefits from next year,” Schwimmer said.
The exchange is studying with Microsoft and a small group of top customers how LSEG data can be “co-mingled” with proprietary data at a bank in a secure way to take advantage of generative AI, Schwimmer told reporters.
LSEG will also set out in its November Capital Market Day how it will expand post-trade services to help customers manage positions better, including uncleared assets, Schwimmer said.
Total income excluding recoveries rose 7.9% to 3.99 billion pounds, with adjusted operating profit up 4.1% at 1.41 billion pounds.
Thomson Reuters, parent of Reuters News, holds a minority stake in LSEG, which pays Reuters for news.
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